Pennsylvania Announces Plan to Collect Internet Sales Tax

December 5, 2011byDaniel Ford

The Pennsylvania Department of Revenue announced that it plans to begin collecting sales tax from out-of-state “remote sellers” with a nexus in the state.

Press reports say that the new rule in part appears to be directed at Amazon.com. The e-commerce giant maintains a warehouse in Lehigh Valley, which would qualify as an in-state presence, thereby establishing a “nexus.”

But a department bulletin also takes an expansive view of what constitutes a nexus, indicating that if a company has affiliates in Pennsylvania, or if its employees travel to Pennsylvania on business, that would constitute a nexus.

Pennsylvania is the latest state to issue new rules on this topic, though its approach is unusual since it hasn’t passed a new law.

“We feel these requirements have been part of the law since sales tax was enacted,” Dept. of Revenue spokeswoman Elizabeth Brassell tells JCK.

The department has also indicated that it expects Pennsylvania consumers who buy online from retailers without a nexus to pay sales tax for their purchases. Currently, consumers are obligated to pay sales tax for out-of-state purchases, but few report them.

“We will be encouraging voluntary compliance through an easier reporting system,” Brassell says.

The department warns that companies that qualify but do not collect sales tax will be “pursued by a variety of escalating enforcement options over time, including audits, liens, and/or referral of the case to a collection agency or the Office of the Attorney General.”

Laws requiring Internet companies to collect sales tax are now on the books in Arkansas, Connecticut, Illinois, California, Rhode Island, New York, and North Carolina. Laws requiring companies to notify consumers they owe taxes are in place in South Carolina and Colorado.